Britain braced for more economic pain

Source: Exec Digital UK

Date :13/08/2008 13:57:35

Bank of England Governor Mervyn King has delivered a stark warning as inflation looks set to hit five percent this year

Britain is today, August 13, braced for a year of further economic pain, after the Bank of England’s Governor admitted that there is a real threat of recession, with growth set to grind to a halt and inflation likely to peak at about five percent during the autumn.

In a bleak message, King (pictured) left little doubt that tough times lie ahead: "The next year will be a difficult one, with inflation high and output broadly flat," he said.

"The British economy is going through a difficult and painful adjustment."

The Bank of England cut its forecast for UK economic growth and held out the prospect of lower interest rates as unemployment rose the most in almost 16 years.

King said the inflation rate will fall below the two percent target in two years if policy makers keep the benchmark interest rate at five percent.

Claims for jobless benefit climbed 20,100 in July to 864,700, the biggest increase since December 1992.